Insurers are wriggling out of settling car and home insurance claims by citing "spurious reasons", according to consumer group Which?.

The findings come as City watchdog the Financial Conduct Authority announced last week it is investigating insurance policy "add-ons" to see if they result in a lack of competition.

Which? says that of 4,800 members questioned, more than one in 10 who made a home insurance claim, and one in 20 who made a car insurance claim, had it fully or partly rejected.

Home insurance policies include a requirement for the property to be kept in good condition, but policies fail to detail what this means. One member says their insurer refused a claim because they had not regrouted their bathroom tiles every year. Also, while policyholders needing to replace a stolen or damaged item require proof of ownership, some insurers take this to the extreme by refusing to pay for freezer contents without a receipt.

There were also cases when car insurers had only agreed to pay half a claim even where the driver said they had strong evidence that an accident was not their fault, leaving policyholders to pay the excess and risk losing their no-claims bonus.

Richard Lloyd, executive director of Which?, says: "We found examples of home insurance claims being rejected for some spurious reasons, and consumers unhappy with way their claim was handled. While most claims are accepted and paid out in full, a minority are not, and if your claim is rejected it could prove costly." Lloyd called on the FCA to take a close look at insurers' response to claims to make sure they are not relying on exclusions buried in the small print to reject legitimate claims. "If you're unhappy with your settlement you should complain to the Financial Ombudsman," he adds.

These finding are backed up by the Financial Ombudsman Service (FOS), which deals with unresolved claim disputes. In the year to the end of March the ombudsman saw a 20% increase in complaints about insurers, the majority of which were about disagreements over claims.

Graeme Trudgill, a director at the British Insurance Brokers' Association, says while insurers are stricter about paying claims as a result of the economic crisis, the industry is working on improving customer relations.